Effect on trade of a state intervention: the fifth criterion in the notion of state aid
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Effect on trade of a state intervention: the fifth criterion in the notion of state aid Local effect of a state aid measure and the To Filiko Teras legend Maria J. Segura Catalán1 · Marianne Clayton1
© Europäische Rechtsakademie (ERA) 2020
Abstract This paper aims at providing an overview of the interpretation of the criterion of effect on trade within the notion of state aid laid down in Article 107(1) TFEU. It refers to both the case-law and the decision-making practice. Special focus is then put into decisions concluding there is no effect on trade. Possible inconsistencies within the precedents lead to the conclusion that an assessment of what constitutes a measure having a local effect remains to be determined on a case-by-case basis. Keywords Notion of state aid · Effect on trade · Local effect · Small size · Small aid amount
1 Introduction The prohibition to grant state aid has been enshrined in the Treaties since the very beginning of the European construction. According to Article 107(1) TFEU, “any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods shall, in so far as it affects trade between Member States, be incompatible with the internal market”. The notion of state aid is thus made out of five conditions: to qualify as state aid a measure must (i) be granted by a Member State or through state resources, (ii) entail an advantage which (iii) is selective in that it favours certain undertakings or the production of certain goods, (iv) distort competition and (v) affect trade between
B M.J. Segura Catalán
[email protected] M. Clayton [email protected]
1
Partner, Clayton & Segura – State Aid Lawyers, Brussels, Belgium
M.J. Segura Catalán, M. Clayton
Member States. These conditions are cumulative which implies that a measure that does not fulfil one of them, for instance, does not affect trade between Member States, does not come within the scope of Article 107(1). A “preliminary” test must be carried out: only measures in favour of undertakings can qualify as state aid. The Court of Justice has consistently defined undertakings as entities engaged in an economic activity. The key element to determine whether an entity can be considered as an undertaking for state aid purposes, regardless of its legal status and the way in which it is financed,1 is whether it carries out an economic activity, which the Court has consistently held to be any activity consisting in offering goods and services on a market.2 The question of whether a market exists, in particular for a given service, may depend on the way the service is organised and may accordingly vary from one Member State to another.3 It is worth noting that the wording of Article 107(1) TFEU4 has never been amended and thus the definition of state aid has never been changed. The case law of the European Courts has acknowledged that the notion of state aid is an objective and legal conce
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